Donors turn to elementary, secondary schools

Entrepreneurs see chance to reform U.S. education

In the world of education philanthropy, colleges and universities traditionally have received about twice as much grant money as elementary and secondary schools.

But in the past few years there has been a quiet revolution in education giving, as a new generation of wealthy entrepreneurs, concerned about high dropout rates and low achievement levels, has begun pouring so much money into projects for kindergarten through 12th grade that such grants now outpace foundation giving to higher education.

According to the Foundation Center, which tracks and analyzes foundation giving, large foundations gave $1.23 billion in grants to elementary and secondary schools in 2003, the latest year for which data are available. That same year, higher education grants totaled $1.12 billion. It was a sharp turnaround from five years earlier, when K-12 grants were about $620 million, compared with $1.07 billion for higher education.

But it is not only the size of the grants that has changed. The nature of the philanthropy has undergone a profound shift.

"A lot of the old philanthropy was devoted to helping schools do what they were already doing," said Richard Lee Colvin, director of the Hechinger Institute at Teachers College at Columbia University. "The new group is saying, `Let's try something different.' It's a lot of young, active entrepreneurial people - Bill Gates, Eli Broad, the Waltons, Dell, Milken - who want to change the schools, who want to use their money to support specific school reforms."

Many of these entrepreneurs-turned-philanthropists talk passionately about a fundamental injustice in public education, with poor minority children getting nowhere near the educational opportunities of wealthy white ones.

And they are not shy about using the philanthropic podium to preach the gospel of school overhaul, as Gates did earlier this year when he appeared at a National Governors Association meeting in Washington and delivered a blistering critique of how obsolete high schools are ruining the lives of millions of Americans every year.

"A number of us have come to believe that the biggest problem America has is the state of our schools," said Broad, the entrepreneur from Los Angeles who founded KB Home, a maker of prefabricated housing, and SunAmerica, an insurance company. He started the Broad Education Foundation in 1999 and has made it the centerpiece of his $1.2 billion network of foundations.

"The world has changed dramatically, with globalization and free trade, moving from an industrial economy to an information economy," Broad said. "But while that's been happening, K-12 education hasn't changed at all. Meanwhile, China's graduating five times as many engineers as we are, and you look at India and you get alarmed."

Many foundations, espousing different approaches, are putting huge sums of money into K-12 education, but not always in existing public schools.

The Walton Family Foundation, created by Wal-Mart's founder, Sam Walton, and his wife, increased its annual K-12 giving almost tenfold from 1998 to 2003, to $45 million, mostly to support charter schools and tuition vouchers for low-income students.

Many foundations focus on attracting and training teachers, principals and administrators. The Milken Family Foundation has spent more than $100 million on programs to attract and reward new teachers. The Wallace Foundation committed $150 million over five years to improve school leadership. The Michael and Susan Dell Foundation, founded in 1999 with assets of more than $1 billion, has given large sums to Teach for America, which places recent college graduates as teachers in schools, and New Leaders for New Schools, which helps train people to become urban school principals.

But the Bill and Melinda Gates Foundation is by far the largest player in the field, investing $1.2 billion in K-12 education over the past five years, including $100 million to New York City to help create small high schools and $100 million for a network of early-college high schools in dozens of states.

Overall, it is too soon to say how much impact the outpouring of new giving will have in the sprawling, locally run $400 billion enterprise of educating the nation's children.

"Even with the Gates money, it's still a drop in the bucket," said William Porter, the executive director of Grantmakers for Education, an organization of 180 foundations that makes gifts to educational programs.

The last big K-12 push, the five-year, $500 million Annenberg Challenge, announced with a flourish at the Clinton White House in 1993, stands largely as a cautionary tale of money spread widely and with little focus. Some of the projects it supported were successful, but it had little overall impact.

Most of today's efforts are far more focused, whether it be the Walton Foundation's backing of parental choice through charter schools and scholarships to private schools or the Gates Foundation's push for high school change.